Other editions, however (such as the Loeb Classics version translated by Murray and Wyatt, as well as Homeri Opera, Vol. 1 translated by Munro and Allen) give line 20 as:

παῖδα δ᾽ ἐμοὶ λύσαιτε φίλην, τὰ δ᾽ ἄποινα δέχεσθαι,

My question is about what to make of "λῦσαί τε" as compared to "λύσαιτε".

On the one hand, either "λῦσαί" or "λύσαιτε" seem to work just fine - the infinitive as request/command and the second person plural active optative aorist have, as far as I can tell, virtually the same meaning in translation.

The problem I see with Pharr's version is the "τε" -- what does the "τε" mean if the passage reads "λῦσαί τε", as Pharr presents it?

[I also downloaded the digital image of the relevant page of the Venetus A manuscript, and it is somewhat difficult to tell whether there is a space between "λύσαι" and "τε", although the accent tracks the Loeb version.]

I.e., τὰ δ᾽ ἄποινα has been changed to τὰ τ᾽ ἄποινα. The two τε's makes "free my daughter" and "take the ransom" a sort of pair.

With δὲ, they are more sort of contrasted "free my daughter on the one hand, but take the ransom on the other hand". This is an exaggeration though, I translate like this to make my point. Actually I think the two different readings are so similar that they should probably translated exactly the same in English.

λῦσαί τε is a variant reading that appears in a few of the medieval manuscripts, including the Townleyan ms. in the British Museum, dated 1059 (according to West's apparatus, it's either a correction of or is corrected by the other reading--he can't tell which), and, according to Eustathius, the 11th c. bishop of Thessalonica who wrote enormous commentaries on the Iliad and the Odyssey, was the reading preferred by Apion and Herodorus, two ancient scholars in the Alexandrian tradition.